Hong Kong exchange makes £30bn bid for London Stock Exchange

Proposal threatens to torpedo the LSE's £20bn-plus acquisition of US data provider Refinitiv

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By

Fareed Sahloul and

Samuel Agini

September 11, 2019 10:52 am GMT

The London Stock Exchange has received a surprise £29.6bn takeover offer from Hong Kong Exchanges and Clearing — a bid that threatens the UK group’s £20bn-plus acquisition of US data provider Refinitiv.

HKEX said in a statement on September 11 that it has made an offer worth 8,361 pence a share to combine the two companies. LSE shares jumped almost 9% to 7,400 pence on Wednesday morning.

Hong Kong’s bid underlines the attractiveness of London’s financial infrastructure and gives the LSE and its shareholders the choice of deepening ties with Asia or pushing ahead with plans to create a UK data and trading giant through a deal with Refinitiv.

Charles Li, chief executive of HKEX, said in a statement: "Bringing HKEX and LSEG together will redefine global capital markets for decades to come. Both businesses have great brands, financial strength and proven growth track records.

“Together, we will connect east and west, be more diversified and we will be able to offer customers greater innovation, risk management and trading opportunities. A combined group will be strongly placed to benefit from the dynamic and evolving macroeconomic landscape, whilst enhancing the long-term resilience and relevance of London and Hong Kong as global financial centres.”

The LSE said: “The board of LSEG will consider this proposal and will make a further announcement in due course.”

HKEX’s bid is subject to LSE shareholders rejecting the $27bn takeover of Refinitiv, announced in August. Shareholders have warmed to the Refinitiv deal but HKEX said its offer — which represents a 22.9% premium on the LSE’s closing share price on September 10 — was a “highly compelling” one for investors in the UK exchange group.

The LSE added it remains committed to completing the Refinitiv takeover and that it will be seeking investor approval for the deal in November.

The Hong Kong group said a successful deal would allow the LSE to capture the “significant growth opportunities presented by mainland China's continuing internationalisation and the emergence of [the renminbi] as a global reserve currency”.

Moelis & Co, the independent investment bank, is advising HKEX. Moelis’s lead banker on the deal is Caroline Silver, a trading and technology specialist who has worked on many of the industry’s most transformative mergers of the last decade.

The LSE is already working with bankers at Goldman Sachs, Robey Warshaw, Barclays, Morgan Stanley and RBC Capital Markets on the Refinitiv transaction.